In a sharp escalation of diplomatic hostilities, India has banned all direct and indirect imports from Pakistan with immediate effect, following the brutal terror attack in Jammu and Kashmir’s Pahalgam region that claimed 26 civilian lives.
A notification from India’s Ministry of Commerce and Industry issued on May 2 invoked national security and public policy grounds to enforce the sweeping trade ban. “Direct or indirect import or transit of all goods originating in or exported from Pakistan… shall be prohibited with immediate effect, until further orders,” it stated.
The measure, now added to India’s Foreign Trade Policy 2023, halts all cross-border trade, including previously permitted items, unless specially approved by the Indian government.
The move follows the closure of the Attari-Wagah land route—the only functional trade link between the two nuclear-armed neighbours—in the wake of the Pahalgam terror attack on April 22. Among the victims were a Nepalese tourist and a pony operator, with Indian authorities confirming terrorist involvement with links to Pakistan.
India had already drastically scaled down economic ties with Pakistan after the Pulwama terror attack in 2019. Trade volumes had remained low in recent years. From April 2024 to February 2025, India’s exports to Pakistan dropped by nearly 57 per cent to $491 million, with no imports recorded during the same period. Key outbound goods included pharmaceutical products, sugar, auto components, and industrial chemicals.
The renewed freeze in trade relations comes at a time when Pakistan is facing mounting internal economic challenges. Global investors have pulled back significantly, with the country’s dollar bonds and stock market both posting their worst performance since 2023. In April alone, bondholders faced losses exceeding 4 per cent, while equities dropped by 3 per cent—reflecting growing uncertainty and concern over geopolitical risks.
In stark contrast, India’s financial markets have remained broadly resilient despite the heightened tensions.
Meanwhile, global powers including the United States have urged both India and Pakistan to show restraint and prioritise de-escalation. However, the Indian government appears firm in linking trade decisions to national security considerations, as cross-border terror incidents continue to strain bilateral relations.
The government has not indicated how long the trade ban will remain in force, though officials suggest it will depend on future security assessments and diplomatic developments.
